Insurance Terms

  • Life Insurance: A legally binding contract where the insurance company promises to provide death benefits to the policy’s named beneficiaries in exchange for premiums paid by the policyholder and accurate disclosure of health conditions and high-risk activities.

    • There are many types of payment plans and most policies can be customized with extra benefits (riders).

    • Term life insurance expires after a set number of years.

    • Permanent life insurance remains active until the insured dies, stops paying premiums, or surrenders the policy.

    • Life insurance policies are backed by the company that issues the policy, though state guaranty funds may pay some claims if the insurer cannot.

  • Probate: In general, the probate process involves collecting the decedent's assets, liquidating liabilities, paying necessary taxes, and distributing property to heirs.

  • You can read more about life insurance policies here.

  • Disability Income Insurance: Disability income insurance provides supplementary income in the event an illness or accident results in a disability that prevents the insured from working at their regular employment.

    • Benefits are usually paid monthly, typically no more than 60% of the insured’s income. Disability income policy premiums typically range between 1.5% and 3% of an insured's gross income. Most disability income policies contain a waiting period, in which benefits cannot be paid from a qualifying disability.

  • Long-Term Care (LTC) Insurance: This insurance product helps people cover the cost of long-term care after a predetermined amount of time. Long-term care insurance covers the types of care not covered by traditional medical plans, Medicare, or Medicaid. Though Medicaid also covers some things that LTC insurance does not cover.

    • LTC insurance can be better than Medicaid if you would like to have in-home care as opposed to living in a nursing home. LTC insurance is a purchase where you do not need to qualify for the insurance, unlike Medicaid. In any case, make sure to think through your decisions to ensure that you receive what you expect for yourself or a loved one.

  • Medicaid Long-Term Care: A benefit for those without savings or retirement income and now need services beyond what their families can provide. Medicaid is also state-run, unlike Medicare which is largely a federal program. Medicaid offers low-cost or free custodial and medical services to those unable to do daily living activities without aid. Medicaid is a public assistance healthcare program for low-income Americans regardless of their age.

  • Medicare: A federal health insurance program for people who are 65 or older. Certain young people with disabilities and people with end-stage renal disease may also qualify for Medicare. It is recommended that you see what the standard Medicare plan covers and then look at options for ways to supplement Medicare through Medigap and Medicare Advantage policies and understand how these plans work together.

  • Individual Health Insurance: If you cannot get health insurance with your workplace or through things like Medigap or the Consolidated Omnibus Budget Reconciliation Act (COBRA) then it would be recommended that you get individual health insurance in case of an accident. You can get individual health insurance through the Health Insurance Marketplace (HIM), which may entitle you to other benefits as well.

    • Typically, with health insurance the higher your deductible (how much you must pay yourself before insurance helps) the lower your monthly premium.

  • Out-of-pocket Maximum Deductible: How much you must spend through co-payments and co-insurance on deductibles and medical services before your health plan will pay the entire cost of covered benefits.

    • You can get individual health insurance through,, or from the websites of major health insurance companies in your area. Note that you will only know the real monthly cost after applying and having your medical history reviewed.

  • Group Health Insurance: Plans purchased by companies and organizations, and then offered to its members or employees. These plans are offered at a reduced cost (premium) due to the insurer’s risk being spread across a group of policyholders. Plans typically require 70% or more participation to be valid. Coverage may be extended to members' family and/or other dependents for an extra cost.

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.